Mortgage Quick Tip

For example, paying an extra $3,000 once every year toward the principle on a $250,000 mortgage can result in interest savings of $42,443 over the life of the mortgage, assuming a 25-year amortization and a fixed rate of 4.19 per cent.

Fixed or a Variable Rate Mortgage?

Vancouver BC, Oct. 23, 2009 (Canada NewsWire) - MyMortgageBC.com

Every homebuyer faces the age-old question of whether to choose a fixed or variable rate mortgage. A new report released today by BMO's Economics Department provides valuable insights to help consumers make the right choice.

"The question of whether to lock in to a longer-term fixed mortgage rate or stay in a variable rate has become an increasingly complex and important issue," said Doug Porter, Deputy Chief Economist, BMO Capital Markets. "Short-term rates are at extreme lows and pressure is likely to build for higher rates in the year ahead."

According to the report, over the past 30 years it has been more cost-effective for borrowers to have a variable rate mortgage 82 per cent of the time. However, under the current environment, Porter points out there are a number of factors to consider before assuming the variable rate is the hands-down winner:

-   Canada has been in a long-term declining rate environment since the
       early 1980s.
   -   The Bank of Canada's overnight rate is now as low as it can go, so
       there is no further downside for variable rates. The surprises can
       only be to the high side from here.
   -   Fixed rates were advantageous during only two recent periods -
       through the late 1970s and in the late 1980s; in both cases ahead of
       a period of rising interest rates, as is the case now.

The Case for Staying Fixed A conventional fixed rate mortgage can mitigate a number of risks. Although inflation hasn't been a problem since 1991, there is a risk of an inflation flare-up as global central banks keep the pedal to the policy metal, and amid record government deficits. The Bank of Canada could be forced to raise interest rates aggressively, driving variable mortgage rates higher, but leaving Canadians with fixed rates unscathed. Plus, fixed rates are currently attractive given that short-term rates are already as low as they can go. The Case for Going Variable

The advantage to a variable rate mortgage is that it has been consistently less costly over time. As well, the current outlook for inflation remains benign, which will likely keep price pressures at bay well into 2011. The soaring Canadian dollar is putting additional downward pressure on prices, reducing the near-term need for the Bank of Canada to raise rates. There is also some risk to locking in as fixed rates could fall if the economy performs worse than anticipated. Even as rates start to rise, Canadians can always lock into a fixed rate at a later date.

The Verdict The decision depends on the individual. For those who don't have a lot of financial flexibility - such as first-time home buyers and those who would run into difficulty from an upswing in interest rates - the moderate extra cost of peace of mind you can get from a fixed rate may be a price worth paying. There is also a reasonable scenario where fixed rates may actually prove to be a cheaper alternative at this point. However, BMO Economics' core view is that the most likely economic and interest rate outlook will ultimately again slightly favour the variable rate option. That's particularly the case given the variable rates being offered, such as BMO's current rate of 2.25 per cent for a five-year variable mortgage.

"The most important thing a current or first time homeowner can do is talk to a knowledgeable mortgage expert about their situation and make decisions based on their stage in life and their particular circumstances," said Jane Yuen, Senior Manager, Mortgages, BMO Bank of Montreal. "So come in to a branch or contact a mortgage expert to decide on the type of mortgage that is best for you at this point in your life."

Brent Irving
Mortgage Expert

Your friend in the mortgage business
Tel: 604-764-6336
Fax: 604-541-6323
Toll Free: 1-888-665-1344
Email: birving@dominionlending.ca

www.MortgageEdgeBC.com

www.BrentIrving.ca

Interest Rate Forecast

When the Bank of Canada does start raising its key policy interest rate in either late 2010 or early 2011, Canadians should brace for “aggressive” increases of up to a percentage point at a time, says a report from the Chief Economist at Laurentian Bank Securities.

The call, from Carlos Leitao, adds a new wrinkle to the debate as to whether the central bank will be able to keep its pledge to leave its key policy rate at 0.25%, or the lowest level possible, until June 2010 in an effort to stimulate the economy. This analysis kicks off a debate in terms of how aggressively the central bank needs to act once it believes rate increases are in order.

The Montreal-based economist said he believes Mark Carney, the Bank of Canada Governor, will be able to keep his June 2010 promise, based on the amount of spare capacity in the economy and continuing job losses that are likely to peak early next year. The Bank of Canada is likely to begin hiking rates after unemployment peaks (in early 2010) and before inflation hits the preferred 2% target (sometime in mid-2011). Once that period comes, Canadians should prepare for steep rate hikes.

“An aggressive tightening – rather than a gradual one – will be necessary because rates are extremely low,” Leitao said in LBS’s weekly note to clients last week. “A ‘measured pace’ would not be appropriate to ‘normalize’ rates when the starting point is virtually zero.” – Financial Post

The Bank of Canada indicated Thursday it has become more confident about the economic recovery in this country and abroad, adding growth in Canada in the second half of this year could exceed previous expectations.

But the central bank warned “persistent strength” in the Canadian dollar remained a risk to growth, and it retained “considerable flexibility” through monetary policy to deal with a high-flying currency if necessary.

The upwardly revised outlook was delivered in the Bank of Canada’s latest interest-rate statement, in which it, as widely expected, left its benchmark rate unchanged at 0.25% and said the rate is expected to remain at that level until June 2010, pending the outlook on inflation.

In its last statement in July, the central bank said a number of factors, from aggressive monetary and fiscal policies to improved financial conditions, were spurring an uptick in domestic demand, but added that a recovery was “nascent”. – Financial Post

Update on Mortgage Rates

This edition of Weekly Rate Minder has the latest, best rates for
Canadian mortgages. At Dominion Lending Centres, we work on your
behalf to find the mortgage that suits your needs. Best of all our service
is "free".* It's the selected lender that pays us and YOU
get the best rate. *(O.A.C., E.&O.E.)
>
Our Best Rates
Explore Mortgage Scenarios with Helpful Calculators on
http://www.BrentIrving.ca

TERMS BANK RATES OUR RATES
> 6 Month 4.60% 3.95%
> 1 YEAR 3.75% 2.75%
> 2 YEARS 4.05% 3.05%
> 3 YEARS 4.65% 3.59%
> 4 YEARS 5.14% 4.89%
> 5 YEARS 5.85% 4.19%
> 7 YEARS 6.80% 5.35%
> 10 YEARS 6.90% 5.25%
Rates are subject to change without notice. *OAC E&OE

PRIME RATE IS 2.25%
VARIABLE RATE MORTGAGES FROM AS LOW AS PRIME + .30%

Please note that rates shown above are subject to change without
notice. The rates shown are posted rates and the actual rate you
receive may be different, depending upon your personal financial
situation. Check with your Dominion Lending Centres Mortgage
Professional for full details and to determine what rate will be
available for you.

*O.A.C., E.& O.E.

Brent Irving
Mortgage Expert

Your friend in the mortgage business
Tel: 604-764-6336
Fax: 604-541-6323
Toll Free: 1-888-665-1344
Email: birving@dominionlending.ca

* We are Canada's premier online mortgage lender, and one of the
fastest growing mortgage companies nationwide!
* Our Brokers are Experts in their field and many are ranked amongst
the best nationally.
* We close loans in all 10 provinces and 3 territories.
* We can process your mortgage in as few as 7 days.
* We have more than 100 mortgage programs making it easy to choose
the best fit for your situation.
* We are the preferred mortgage lender for several of Canada's top
companies.
* Dominion Lending Centres' Mortgage Experts are available anytime,
anywhere, evenings and weekends; we'll even come to you!

Mortgage Rate Prediction Update

BC Real Estate Association’s latest Mortgage Update issued in mid-June

“You just might find the answer to: Where do we go after hitting bottom? BCREA anticipates rock-bottom mortgage rates should move up in the quarters ahead—particularly for longer fixed term mortgages. BCREA is predicting a cumulative rate increase of 75 basis-points by the end of 2010 as economic prospects improve and global interest rates rise from record lows. The report indicates that inflation in Canada, although expected to remain relatively low, will start to rise resulting in a modest increase in medium term interest rates.”

As a mortgage broker in Vancouver BC I don't feel that the BCREA's prediction that fixed mortgage rates will rise in the upcoming quarters is very bold. We're regressing back to the mean from all time low mortgage rates.

Brent Irving
Mortgage Expert

Your friend in the mortgage business
Tel: 604-764-6336
Fax: 604-541-6323
Toll Free: 1-888-665-1344
Email: birving@dominionlending.ca

Web: www.BrentIrving.ca

Web: MyMortgageBC.com

What is an Interest Rate Differential Penalty or IRD

With interest rates at all time lows many homeowners are wondering if it may be a good idea to refinance their mortgage and are surprised at the size of the penalty they have to pay. These large penalties charged by your bank are because of mortgage penalty calculation call IRD. Most mortgage lenders charge a penalty which is either 3 months interest or an Interest Rate Differential whichever is greater.

What Does Interest Rate Differential - IRD Mean?
A differential measuring the gap in interest rates between two similar interest-bearing assets. Traders in the foreign exchange market use interest rate differentials (IRD) when pricing forward exchange rates. Based on the interest rate parity, a trader can create an expectation of the future exchange rate between two currencies and set the premium (or discount) on the current market exchange rate futures contracts.

Investopedia explains Interest Rate Differential - IRD
The IRD is a key component of the carry trade. For example, say an investor borrows US$1,000 and converts the funds into British pounds, allowing the investor to purchase a British bond. If the purchased bond yields 7% while the equivalent U.S. bond yields 3%, then the IRD equals 4% (7-3%). The IRD is the amount the investor can expect to profit using a carry trade. This profit is ensured only if the exchange rate between dollars and pounds remains constant.

WHAT DOES THIS MEAN FOR ME AND MY MORTGAGE?

This usually means the difference between the interest rate on your mortgage contract compared to the rate at which the lending institution can re-lend the money.

For example:

-If your mortgage has a balance of $125,000 at 9.25%,

you have 2 years left to go and the current 2 year mortgage rate is 6.25%.

-Then the lending institution will probably charge you -

$125,000 X 24 months X 3% (9.25 - 6.25) = $7,266.21

However, just to further confuse the issue, the penalty above has not been present valued. This is when a lender charges a lower penalty because you are paying all of the ‘extra’ interest (in the example 3%) now, not over the remaining term. Some lenders present value, other lenders do not.

Scotiabank offers a 10 year Fixed Rate Mortgage Special

Scotiabank offers a 10 year Fixed Rate Mortgage Special

Vancouver, Mar 6, 2009 (My Mortgage BC) -- -- Scotiabank today announced a reduction to 5.25 per cent from 7.15 per cent in the interest rate for the Bank's 10-year fixed rate, closed term mortgage. The pricing change - effective today - gives homeowners an opportunity to benefit from historically low interest rates.

"This is the perfect solution for customers who are looking for long-term interest rate comfort," said Charles Lambert, Managing Director, Mortgages, Scotiabank. "Prudent customers can now complement their borrowing strategies with plans to be mortgage free within 10 years."

Scotiabank, which offers a full suite of competitive mortgage products, including the popular Scotia Total Equity Plan (STEP), also announced a rate reduction to 3.25 per cent from 5.25 per cent for the Bank's Save Now, Save Later product, a one-year fixed rate, closed term mortgage.

Scotiabank's new 10-year offer reflects the Canada Mortgage and Housing Corporation's (CMHC's) recent expansion of the Canada Mortgage Bonds Program. CMHC introduced the Canada Mortgage Bonds (CMB) program in 2001. It was expanded to include 10-year CMBs in July 2008. The program's objective is to benefit homebuyers and the housing industry by improving access to lower-cost mortgages.

If you are interested in obtaining more information on Scotiabanks 10 year fixed rate mortgage special please don't hesitate to contact me. If you would like to learn more about me and my services please visit Dominion Lending Centres

Current Mortgage Rates

Thanks to all of the visitors to my blog.

Canadian Mortgage Rate Update
Bank of Canada meets on January 22 and it will be interesting to see what happens to the Prime Rate. Everything I've indicates to a lower Prime Rate.

The Bank Prime Rate is currently 3.50%.

Best Fixed Mortgage Rates:

1 Year Fixed 3.89%
2 Year Fixed 4.59%
3 Year Fixed 4.85%
4 Year Fixed 4.89%
5 Year Fixed 5.79%**
7 Year Fixed 6.20%
10 Year Fixed 6.25%

5 Year Rate Special 5.79% .

Best variable rate is Prime +.60%

*rates are always subject to change without notice. I'll always do my best to get you the mortgage rate available.

MyMortgageBC.com is a mortgage broker located in Vancouver, BC. If you would like the best mortgage rate, or have any questions regarding the mortgage process you should give us a call at 604-764-6336. I work with Dominion Lending Centres which is one of Canada's largest mortgage broker companies.

Bank of Canada Drops Rates By .50%

April 22, 2007 - Bank of Canada drops the overnight rate by .50%.

None of the lenders have reacted by lowering their mortgage rates yet but as soon as I see somes changes by the mortgage lenders I'll post the mortgage rate updates.

Here is the link to the Bank of Canada press release regarding the rate drop.

This is the best time to be pre-approved for a mortgage that we've seen in a long time. Give me a call at 604-764-6336.

Interest Rates Heading Lower? TD Securities Thinks So.

April 10 (Bloomberg) -- Canada's February trade surplus widened to the largest in nine months, led by increased exports of passenger cars and energy. The surplus widened to C$4.94 billion from a revised C$2.78 billion in January, Statistics Canada said today in Ottawa. Exports rose 3.8 percent, the fastest in 11 months, as energy sales abroad rose to a record.

Canada, the world's eighth-biggest economy, is benefiting from high demand for commodities such as oil and metals, helping the country ride out a slump in manufacturing. Still, the outlook for exports is likely to worsen in future months as the U.S. economic slowdown crimps demand for Canadian products, said Jacqui Douglas, an economist at TD Securities in Toronto.

``I don't think the Bank of Canada is expecting this to continue,'' Douglas said of the widening surplus. ``The risk is that exports turn down sharply over the next few months.'' The central bank cut interest rates by half a point for the first time since 2001 on March 4, citing ``intensifying'' signs of a decline in exports on slower demand from the U.S. and the high Canadian currency.

TD Securities, a division of Toronto-Dominion Bank, expects the central bank to lower interest rates 150 basis points to 2 percent by July, starting with a 50 basis point reduction at the next announcement on April 22.

Mortgage Rates Coming Down?

Helmut Pastrick is the chief economist for BC Central Credit Union. Helmut expects that mortgage rates will continue to decline in 2008 and 2009. "Most of the decline in 2008 will be in variable-rate mortgages, while in 2009 fixed-term mortgage rates will drop the most," he said.

"The Bank of Canada cut its target rate by 50 basis points to 3.50% on March 4, bringing the cumulative reduction in rates to 100 bps since the Bank started easing last December. Another rate cut in April is practically guaranteed and another in June is highly likely. Further rate cuts are possible, but at some point the economic news and outlook will begin to improve. That will probably play out in the second half of 2008. There is considerable monetary and fiscal stimulus in the U.S. pipeline and some in Canada as well. The Bank is in a holding pattern until mid-2009, when it will begin returning the target rate to levels appropriate to evolving higher economic growth. Longer-term bond yields will climb higher as the economic news and outlook improves in 2009. However, this will not translate into higher fixed mortgage rates, since the cost of funds will decline when credit markets return to a more normal state and the current abnormally high risk spreads narrow."

Bank of Canada Lowers Interest Rates

The bank of Canada has reduced their key lending rate by ½ a percent and more cuts may be coming as Canada prepares itself for the impact of a potential US recession. The next meeting is scheduled on Apr 22, 2008. With “core” inflation running at about 1.4%, well below the 2.0% target, there was room for a “monetary stimulus” and a ½ point reduction.

This cut has is great for people that have variable rate mortgages or lines of credit because the rate is directly tied to the prime rate. We'll have to wait to see the impact the prime rate drop has on longer term fixed mortgages.

Canadian Mortgage Rate Update Feb 6, 2008

Thanks to all of the visiters to my blog.

Canadian Mortgage Rate Update Feb 6, 2008

Bank of Canada lowered the Prime Rate and the lenders have follower on their variable produccts but have been slow to move their fixed rates down.. Expect rates to drop further in the next few months.

The Bank Prime Rate is currently 5.75%.

Best Fixed Mortgage Rates:

1 Year Fixed 5.95%
2 Year Fixed 6.05%
3 Year Fixed 6.05%
4 Year Fixed 5.05%
5 Year Fixed 5.84%**
7 Year Fixed 6.20%
10 Year Fixed 6.25%

5 Year Rate Special 5.74% ** Must close before Feb 28th, 2007.

Best variable rate is Prime -.60% or 5.15%

MyMortgageBC.com is a mortgage broker located in Vancouver, BC. If you would like the best mortgage rate, or have any questions regarding the mortgage process you should give us a call at 604-764-6336.

Expect Another Rate Cut In March Say The Economists

Good news for anyone needing a mortgage in the upcoming months. Canadian economists expect another 1/4% rate cut by the Bank of Canada in March.

Because of the slowdown of the US economy and the impact that has here in Canada most economists agree that in order to keep our economy stimulated the Bank of Canada will be lowering rates.

JP Morgan Chief Canadian Economist Ted Carmichael said he expects the Bank of Canada to lower its key rate by 50 basis points at each of its next two monetary policy-setting dates.

"We believe that by the next meeting, data on the U.S. economy will provide a smoking gun, showing clear signs of a sharp economic slowdown," Beata Caranci, director of economic forecasting at TD Bank, said.

"Given that economic and financial market conditions will probably continue to deteriorate between now and the next policy announcement on March 4, you can't rule out an eventual 50-pointer," Michael Gregory, senior economist at BMO Capital Markets, said.

Bank of Canada cuts rates by 25 basis points

Bank of Canada has cut it's overnight rate by 1/4 percent. We will have to see if the Canadian Banks respond and start lowering their fixed term mortgage lending rates. The Bank of Canada also indicated that we can expect further rate cuts to help deal with the drastic slowdown in the US economy.

For those interested the Bank of Canada will be publishing their full analysis on Thursday.

The Globe and Mail has what I feel is the best report on this rate decrease.

Canadian Mortgage Rate Update Jan 10, 2008

Canadian Mortgage Rate Update Jan 10, 2008

It will be interesting to see what the Bank of Canada decides to do with interest rates in the upcoming months. The Cheif Economist from Merrill Lynch has said that he expects the Bank of Canada to drop interest rates as much as 150 basis points. I find that hard to believe with the way the Canadian Economy has been going.

The Bank Prime Rate is currently 6.00%.

Best Fixed Mortgage Rates:

1 Year Fixed 6.00%
2 Year Fixed 6.10%
3 Year Fixed 6.10%
4 Year Fixed 5.95%
5 Year Fixed 5.99%
7 Year Fixed 6.25%
10 Year Fixed 6.30%

Best Variable Rate Mortgage:

Best variable rate is Prime -.60% or 5.40%

MyMortgageBC.com is a mortgage broker located in Vancouver, BC. If you would like the best mortgage rate, or have any questions regarding the mortgage process you should give us a call at 604-764-6336.

Canadian Mortgage Rate Update December, 2007

Canadian Mortgage Rate Update December 7, 2007

Bank of Canada reduced the prime rate by .25% which will save the people in variable rate mortgages some money. There has been very little change in mortgage rates in the last couple months. Fixed term mortgage rates remain unchanged even after the Bank of Canada announcement.

The Bank Prime Rate is currently 6.00%.

Best Fixed Mortgage Rates:

1 Year Fixed 5.60%
2 Year Fixed 5,65%
3 Year Fixed 5.70%
4 Year Fixed 5.95%
5 Year Fixed 5.99%
7 Year Fixed 6.05%
10 Year Fixed 6.15%

Best Variable Rate Mortgage:

Best variable rate is Prime -.60% or 5.40%

MyMortgageBC.com is a mortgage broker located in Vancouver, BC. If you would like the best mortgage rate, or have any questions regarding the mortgage process you should give us a call at 604-764-6336.

Canadian Mortgage Rate Update Effective October 20, 2007

Canadian Mortgage Rate Update October 20, 2007

The Lenders increased their 5 year fixed mortgage rate this week and all other rates remain the same. The Bank of Canada announced this month that they would leave the prime rate unchanged. Below are fully discounted rates available to you.

The Bank Prime Rate is currently 6.25%.

Best Fixed Mortgage Rates:

1 Year Fixed 5.60%
2 Year Fixed 5,65%
3 Year Fixed 5.70%
4 Year Fixed 5.95%
5 Year Fixed 5.99%
7 Year Fixed 6.05%
10 Year Fixed 6.15%

Best Variable Rate Mortgage:

Best variable rate is Prime -.60%

MyMortgageBC.com is a mortgage broker located in Vancouver, BC. If you would like the best mortgage rate, or have any questions regarding the mortgage process you should give us a call at 604-764-6336.

Bank of Canada Keeps Rates Unchanged

Bank of Canada projects lower growth in '08, keeps rate unchanged

My Mortgage BC.com note: This is an important development for interest rates in Canada. The Bank of Canada predicts a downturn in the economy as a result of the strength of the Canadian dollar. This should help keep mortgage rates steady.

VANCOUVER, BC - The Bank of Canada has kept its key overnight rate unchanged at 4.5 per cent, saying it is less worried about inflation and projecting a marked slowdown in the Canadian economy next year.

In an unusually fulsome announcement, the central bank cites a series of conflicting and changing economic and financial indicators that suggest it may remain on the sidelines in terms of interest rates for some time.

The Canadian economy, it said Tuesday, is running further above its production potential than previously forecast, fuelled by robust global growth and strong commodity prices.

But the Canadian economy is headed for a sharp downturn, the bank predicts.

The deepening U.S. housing crisis will cut into the U.S. economy even further and the bank now projects growth south of the border will average a meagre 1.9 per cent this year and 2.1 per cent next.

That, along with the Canadian dollar soaring above parity with the greenback, and tight credit stemming from the summer financial market turmoil, will also start to cool Canadian growth as U.S. demand for Canadian exported goods dwindle.

As such, the bank has hiked its projected growth for the Canadian economy for this year from 2.5 per cent to 2.6 per cent, but said the economy will slow markedly to 2.3 per cent next year and 2.5 per cent in 2009. In July, the bank had said growth in Canada would average 2.6 per cent next year.

"In line with this projection, the bank judges, at this time, that the current level of the target for the overnight rate is consistent with achieving the inflation target over the medium term," it said in the statement.

But in fact interest rates are higher than would be assumed, the bank said. Following this summer's subprime mortgage meltdown in the U.S., the bank said the cost of borrowing for firms and households a quarter-point higher than assumed prior to tightening credit conditions.

The central bank noted that although inflation has been running ahead of its two per cent target for more than a year, it expects that both core and total inflation will return to the target by the second half of next year.

"There are significant upside and downside risks to the bank's inflation projection," he adds.

On the upside, excess demand in the Canadian economy would persist longer than projected because of higher consumer spending and lower productivity growth.

On the downside, the loonie, which is running well above the bank's previous forecast of 93 to 95.5 cents US, could remain above the 98 cents US level the bank is not projecting, and the spillover from the U.S. housing slump would be greater than expected.

"All factors considered, the bank judges that the risks to its inflation projection are roughly balanced, with perhaps a slight tilt to the downside," it said.

The bank last changed its key rate on July 5, when it hiked interest rates from 4.25 per cent to 4.5 per cent. The bank's next scheduled date for announcing interest rates is Dec. 4.

MyMortgageBC.com is a mortgage broker located in Vancouver, BC. You can take advantage of our knowledge to help you with your next mortgage. Give us a call at 604-764-6336,

BMO predicts that the Bank of Canada to raise rates twice this summer

BMO predicts that the Bank of Canada to raise rates twice this summer

The Bank of Canada will boost interest rates twice this summer, propelling the Canadian dollar to soar to new 30-year highs, the Bank of Montreal (TSX:BMO) predicts.

The BMO Capital Markets report forecasts that despite recent dampening signals, the central bank will tighten monetary policy for the first time in over a year starting with a 25 basis point hike next week, and further turn the screw on Sept. 5.

This will elevate the bank's key lending rate to 4.75 per cent from the current 4.25 per cent, a move that will not only add fuel to the already soaring loonie, but increase the cost of borrowing for both businesses and homebuyers taking out mortgages.

"The loonie would easily fly above 96 cents US," said the report written by economists Michael Gregory and Benjamin Reitzes. "But while a test of parity is possible, we judge that it's not probable."

The Canadian dollar closed up 0.16 of a cent to 94.46 cents US on Wednesday, the highest since early June, 1977.

In recent weeks, many economists have been softening their hard predictions that bank governor David Dodge will raise rates significantly this year.

After warning in May that the Canadian economy was overheated and interest rates stubbornly holding well above the bank's two per cent target, the bank has tempered its comments of late, including suggestions that the loonie's flight may not be justified by the fundamentals.

Recent economic data has also been weaker than expected, including last week's gross domestic product report showing zero growth in April, and core inflation cooling to 2.2 per cent in the same month, from 2.5 per cent in March.

But the BMO economists say May's consumer price index, when it is released in two weeks, will again show inflation at problem levels. And although growth stalled in April, interest-sensitive sectors such as home and auto sales remain strong, suggesting that interest rates are too low to provide a necessary check on Canadians' spending.

The other factors the central bank will consider, say the economists, is unemployment at a 33-year low, capacity pressures in the economy and sluggish productivity that is contributing to a near 16-year high increase in labour costs.

"The fact is we're coming off an economy that was operating well above capacity and building inflation pressures, the fact that we've had a few weak numbers is not going to stop the bank from what I think is really re-normalizing rates," said Gregory.

"Inflation has been above the bank's target for nine months in a row and it will soon be 10, so sooner or later, the bank is going to have to step in."

Gregory said two events might move the bank from following through on the second tightening measure in September - the loonie rising faster than expected, and the U.S. economy falling flat over the summer months.

"This summer we'll start to see the peak of headwinds blowing in both the housing and mortgage markets, so if the U.S. economy tumbles badly, it could get the bank thinking twice," he said.

The BMO report also predicts that the U.S. Federal Reserve will keep U.S. interest rates on hold indefinitely, but that both England and the European Central Bank will raise rates this summer.

Based on what the BMO economists are saying, there is no better time than now to be pre-approved for a mortgage. I can offer a 4 month mortgage rate guarantee. Act now before rates go up.